I’m Professor and Chair of the Department of Economics at LIU Post in New York. I’ve published several articles in professional journals and magazines, including Barron’s, The New York Times, Japan Times, Newsday, Plain Dealer, Edge Singapore, European Management Review, Management International Review, and Journal of Risk and Insurance. I’ve have also published several books, including Collective Entrepreneurship, The Ten Golden Rules, WOM and Buzz Marketing, Business Strategy in a Semiglobal Economy, China’s Challenge: Imitation or Innovation in International Business, and New Emerging Japanese Economy: Opportunity and Strategy for World Business. I’ve traveled extensively throughout the world giving lectures and seminars for private and government organizations, including Beijing Academy of Social Science, Nagoya University, Tokyo Science University, Keimung University, University of Adelaide, Saint Gallen University, Duisburg University, University of Edinburgh, and Athens University of Economics and Business. Interests: Global markets, business, investment strategy, personal success.

Former top Chinese Communist Party leader Mao Zedong peers from China's biggest single-currency note, a 100 Yuan (or Renminbi) note, 22 July 2005 in Beijing. Asia woke to a changed financial landscape after China finally abandoned its decade-old peg to the US dollar, with regional governments and analysts widely applauding Beijing for the move. Asian currencies were uniformly tipped to appreciate in the long-term following China's announcement late 21 July to scrap the yuan peg for an undisclosed trade-weighted basket of currencies, leaving China's new exchange rate set at 8.11 yuan to the dollar compared to the old rate of around 8.28 yuan. (Image credit: AFP/Getty Images via @daylife)

Which country has the largest number of billionaires, China or America?

It depends on the list used. According to the latest Hurun Global Rich List 2013, China had 212 billionaires in 2013, compared to 211 in America. According to Forbes 2013 list, the US–the two surveys use different metrics.

Which country has the world’s most admired corporations, China or the US?

The US.

According to a recent Fortune survey, US corporations occupied all ten top positions (Apple, Google, and Amazon filled the top three), and most of the total of 50 positions in the list, which didn’t include any Chinese companies.

The same pattern is observed in a Barron’s survey of the World’s Most Respected Companies published last July. The top of the list is filled mostly with American companies like Apple, IBM, and McDonald’s, with Chinese lagging far behind — towards the middle of the list.

What can explain this divergence between the first survey (Huron) and the last two surveys? Isn’t the amassing of billions the product of building successful enterprises? Simply put: why do Chinese billionaires fail to build their own most admired corporations?

As discussed in previous pieces, the answer to these questions is to be found in the entrepreneurship model followed in the two countries. In the US, entrepreneurship is demand driven. This means that it begins with consumer needs and desires, and comes up with innovative ways to fulfill them than the competition.

That’s how American companies end up producing cool products like the iPhone, the iPod, the iPad, and Google Glass—products that win consumer admiration — and end up turning their founders into billionaires.

Simply put: Making billions in America is usually the reward for building the world’s most admired corporations.

In China, entrepreneurship is supply driven. It begins with producers rather than consumers, with government initiatives to foster the growth of one industry over another by providing various incentives and guarantees.

The trouble with this approach is two-fold.

First, would-be entrepreneurs invest a great deal of time in forging relations with government officials to receive the right incentives and guarantees that will — in essence, shifting the risk of the investment to the taxpayers.

Second, because they spend too much time trying to gain access to government incentives, would-be entrepreneurs spend too little time in studying the market for new products that will ultimately determine the success or the failure of the company. That’s why Chinese companies fail to come up with cool products that beat their American counterparts, though their founders have become billionaires in the process.

Simply put: Making billions in China isn’t usually the reward of building successful business enterprises, but the result of guanxi, good relations with government officials who continue to decide who will be in what business and for how long.

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Tim, will the count affect Panos’ comment? I doubt it. I totally agree with you on “studying the market for new products that will ultimately determine the success or the failure of the company.” Please help me understand. Where did the Chinese billionaires make their money? I thought they have done “studying the market” and made products that most people need and can afford. Chinese products are not admired but needed to survive. How do you explain the fact that American owe Chinese trillions of dollars?

The billionaires in China are pretty much crooks who are loyal to the communist party. The billionaires in America have pretty much earned it by their smarts and wise decisions, and they are loyal to the workers (well, I hope). There is a huge difference in how businesses operate in China and the US. It seems that business in China is always subject to the whims of some communist boss, whereas in the US, business is what runs the country. The government just tags along hoping for the tax revenue. The government really owns no businesses, but in China, the government owns all the important businesses.

You are either a very good example of brainwashing or come from another planet. There are crooks everywhere. If you do live in a “free world”, I feel sorry for you. Learn to compare objectively instead of one country’s “bad” against the others’ “good”.

Wow, talk about desperation and insecurity, how low America has sunk… 50 years ago ALL American companies and brands were the envy of the world, and now all you can trot out is Apple and IBM. The most successful American companies now are the ones in the defense and incarceration industries, both of which are driven by government demand. How sad.

The Hurun Rich List states: “By country, the US was home to 409 billionaires, comfortably ahead of the 317 from China.” The 212/211 figures are based on the number of billionaires with companies listed in their respective countries, which is a different matter altogether.

Why stoop to work when guanxi is on your side? Where the US socio-economic system supports (or used to) innovative creation and rags-to-riches, the only route to the top in China is via personal connections with the properly connected. And overabundant innovative creativity will only get you in trouble.

Crony capitalism is nothing new to the world, nor is rent-seeking. The growth of those two evils in the US during the last few decades is responsible for significant loss of growth. China and other societies still plagued by feudalistic residues cannot hope to ever sustain such mobilities as the US did 100 or 50 years ago despite their recent run-up following the other Asian tigers. Now they are slowing and aging, so may never achieve ‘most admired’ status.

One other item: is it true that most millionaires and billionaires in China are looking for new places to live and put their money? Does this say anything about China’s future?

Rent-seeking and cronyism persists, however, and increasingly stifles the free enterprise economies. Maybe the whole system slows and wobbles after reaching a certain plateau.

Here is a better one. Chinese billionaires are sending their children to school here and so far the ongoing pattern is that of their obtaining a four-year degree in the West, followed by a quick return home.

Don’t count on their bringing any of that money over, even though something tells me that the U.S. banks could use the infusion of liquid capital if the tight credit situation post QE1-QE3 era is any indication of where our financial system actually stands at present.

I have been here since early 90′s. Fully agree. THis is the key reason why western mnc underperform here (generally- there are exceptions) what makes it worse is when a western company tries to emulate a local – then they have lost their compass. The relationships for real business often go back a few generations.

I think it is not very fair to single out China for not producing “cool” products. What are the “cool” products from Canada, Ireland, Holland, or Australia? At one time Japan and South Korea did not make cool products, but now they do; Samsung is making Apple look old fashioned. Please give China some time.

Cool products are great, with one caveat: the prevailing majority of the world neither needs, knows about, nor can afford the “cool” toys. This limits revenues to say the least, while underscoring the fact that the world will always need mop buckets, hammers, and toilet seats in a number far exceeding that of iPhones and Beats ™ headphones.

Shortsighted to say the least considering that the American consumer market is much older than the Chinese, China’s focus on export-led growth, FDI driven transfer of expertise, what we have learned from the Samsung debacle in regards to American-side protectionism, and the non-economic factors contributing to the “admired” companies rise on the international scale.

#1.) Attempting to generate export driven growth by producing toys “admired” by many but obsolete within 6-9 months would require Chinese companies to decrease their potential market share. So the top-of-the line gadgets are “admired” great…wonderful, does not change the fact that we have sustained a two-decade long trade deficit with the “non-admired” mop buckets and other necessary goods.

#2.) The Samsung case showed that U.S. judicial authorities will side with U.S. based companies. The Samsung phones did not have enough in common with the iPhone to make a sober case for patent infringement and unsurprisingly Apple did not pursue similar cases against Samsung outside of its domestic market, which speaks for itself in context of the ICJ, the WTO, and TRIPS. Apple knew it had no leg to stand on in front of international judiciary systems so it did the best that it could. Saved itself from competing in the domestic market – as per the neu-Corn Laws.

#3.) the list of “most admired” companies is reminiscent of the Nobel Prize. Ostentatiously it is open to global competition, but a cursory study uncovers a strong correlation between origin of research and the accolades given. In short, your lists of “most admired companies” are nothing more than the West laying laurels to its own.

Meanwhile, the unsung corporations are making the money at a pace much more rapid than the “golden children”; given their host countries’ lack of acquiescence of IMF driven market-take over.